Ginnie Mae’s total e-note usage tops $11 billion

The latest phase of Ginnie Mae’s electronic promissory-note program, which added some new flexibilities for modifications and certain service members’ loans in June, has seen accelerated progress since then.

The total issued has exceeded $11 billion based on the originated volume of loans involved, Ginnie Mae President Alanna McCargo told attendees at a Mortgage Industry Maintenance Standards Organization conference on Monday. Just prior to the pilot’s relaunch as a permanent program on June 21, the total volume issued since the program’s inception in July 2020 was just  over $8 billion.

Advocates have hoped that digitizing more promissory notes, which are documents that establish a claim to a debt, could create more efficiencies for mortgage companies and borrowers. That could become increasingly important in a market with higher rates and lower loan volumes.

“We have seen lots of new applicants, so there’s a lot of interest,” McCargo said, noting that the initiative has made “huge strides” even though origination volumes haven’t been as high.

The number is a drop in the bucket compared to the roughly $45.5 billion issued in Ginnie-insured mortgage-backed securities in July, for example, but the acceleration in e-notes nevertheless is notable in that they were slow to gain traction for many years. In the past, some mortgage companies have found inflexibilities in Ginnie’s rules and the lack of adoption by other players involved in the e-note process to be challenges.

It’s long been hoped that Ginnie’s e-note program, which followed in the wake of those at government-sponsored enterprises Fannie Mae and Freddie Mac’s, would be a key driver of adoption because the three entities’ programs constitute a large portion of the mortgage market. 
Ginnie recently coordinated with Fannie and Freddie’s oversight agency on some aspects of newly-overhauled financial standards for mortgage companies because many are counterparties the government-related agencies have in common, and McCargo said that will continue to be a general theme as they work together to support an affordable and equitable mortgage market in line with Biden administration aims.

“We think about it as a real strong sustainable system for the future. We think that it has to be in parallel with what’s happening on the GSE front,” she said.